Baghat Urban Cooperative Bank recovers Rs 4 cr in 2nd auction round

In a modest yet significant financial breather for the cash-strapped Baghat Urban Cooperative Bank, the second round of property auctions has yielded Rs 4.13 crore. Four mortgaged assets located in Baddi, Jatoli and Haret village near Solan were sold against a combined reserve price of Rs 3.80 crore, giving the bank a gain of Rs 33 lakh. These properties were part of a batch of 13 assets identified as likely to attract buyers after the first round, comprising 28 properties, failed to draw any bids.

Managing Director Rajkumar confirmed that four out of the 13 properties put under the hammer were successfully sold. He added that the bank would soon initiate the next round of auctions, targeting outstation properties situated across Shimla, Kangra, Kandaghat, Dagshai, Pacchad and Nalagarh in an effort to accelerate recoveries.

The bank has been under pressure ever since the Reserve Bank of India imposed stringent restrictions, including capping withdrawals at Rs 10,000 per depositor for six months. These curbs were enforced in response to the bank’s deteriorating financial health and ballooning non-performing assets (NPAs). Since October 8, the gross NPA has marginally reduced from Rs 138 crore to Rs 123 crore, while the net NPA has improved from 12.91% to 9.5%. Though the movement is positive, the figures remain far from ideal as banks generally aim for near-zero NPAs and a gross NPA below 2% is considered healthy.

What continues to trouble the bank, however, is the sluggish recovery from large borrowers. Nearly 30 defaulters, each owing more than Rs 1 crore, have shown little urgency to clear their dues. One borrower, who owes over Rs 4 crore, has reportedly made no effort to repay despite the bank’s outreach. Even the one-time settlement scheme, introduced three weeks ago and valid until December 31, has failed to draw interest despite concessions on interest payments.

Depositors and shareholders, whose Rs 466 crore and Rs 22 crore respectively remain stuck, are growing increasingly uneasy. They are preparing to protest outside the bank on December 18. Meanwhile, hopes now hinge on the three-day lok adalat beginning December 16, where defaulters have been summoned to negotiate repayments.